BUTLER TREE SERVICES LIMITED

Executive Summary

Butler Tree Services Limited shows financial strain with negative working capital, depleted equity, and increased short-term liabilities, despite a strong cash position. Immediate actions to improve liquidity, reduce debt reliance, and enhance profitability are critical to prevent further deterioration. With careful management, the company can stabilize and rebuild its financial health.

BUTLER TREE SERVICES LIMITED - Analysis Report

Company Number: 13254345

Analysis Date: 2025-07-29 14:55 UTC

Financial Health Assessment for Butler Tree Services Limited

---

1. Financial Health Score: D

Explanation:
Butler Tree Services Limited shows signs of financial distress in the latest period, with net current liabilities, sharply reduced net assets, and significantly increased short-term liabilities, notably directors' loans. While the company remains active and solvent on paper, the rapid deterioration in working capital and equity signals caution. Overall, the financial "vital signs" suggest a fragile condition bordering on distress.

---

2. Key Vital Signs (Core Financial Metrics) and Interpretation

Metric	Latest Period (30 June 2025)	Previous Period (31 March 2024)	Interpretation
Fixed Assets (Tangible)	£3,168	£29,645	Sharp reduction due to asset disposals; shows possible asset liquidation or downsizing.
Current Assets	£223,464	£154,305	Increase mainly driven by cash, indicating improved liquidity on face value.
Cash at Bank	£222,726	£138,335	Healthy cash position, though could be offset by liabilities.
Debtors	£738	£10,970	Significant drop in receivables, possibly indicating tighter credit control or reduced sales.
Current Liabilities	£226,461	£165,683	Significant rise, driven largely by directors’ loans and corporation tax, increasing short-term obligations.
Net Current Assets (Working Capital)	-£2,997	-£11,378	Negative, but improved from prior year; indicates short-term liquidity strain persists.
Net Assets (Equity)	£171	£18,267	Equity almost wiped out, reflecting accumulated losses or distributions exceeding profits.
Shareholders' Funds	£100	£18,168	Mirrors net assets; near depletion of equity capital.

Additional Notes:

• Directors’ loan accounts have increased from £140,136 to £189,232, indicating reliance on internal funding to meet liabilities.
• Corporation tax liability increased substantially, which may impose cash flow pressures.
• The company is solvent but with very thin equity and negative working capital, indicating “symptoms of distress” that warrant close monitoring.

---

3. Diagnosis: What the Financial Data Reveals About Business Health

• Cash Flow Status: The company shows "healthy cash flow" with a strong cash balance (£222k), which is a positive sign akin to a patient having good hydration status. However, this is overshadowed by heavy short-term liabilities, particularly the directors’ loans and tax obligations, which act like “high blood pressure” stressing the system.

• Liquidity & Working Capital: The current liabilities exceed current assets (negative working capital), which is a classic “symptom of distress” indicating potential difficulty in meeting short-term debts as they fall due without relying on further financing or asset sales.

• Equity Erosion: Net assets have dropped dramatically from £18k to £171, a near depletion of shareholder equity. This is analogous to a patient losing vital reserves. It signals past operating losses or distributions that have eroded the financial buffer.

• Asset Management: The company has disposed of significant fixed assets, indicating possible efforts to raise cash or restructure operations. While this may improve liquidity short-term, it could impair productive capacity and future earnings potential.

• Reliance on Directors’ Loans: Increasing directors’ loans suggest the business depends heavily on internal financing rather than external creditors or operational cash flow, similar to a patient relying on medication rather than natural recovery.

• Business Age and Size: Incorporated in 2021, the company is relatively young and in the landscape services sector, which may be subject to seasonal and economic fluctuations affecting stability.

---

4. Recommendations: Specific Actions to Improve Financial Wellness

1. Improve Working Capital Management:

   • Accelerate collection of receivables and manage payables carefully to reduce negative working capital.
   • Avoid increasing short-term debts; negotiate longer payment terms with creditors if possible.

2. Address Directors’ Loan Exposure:

   • Formulate a plan to reduce reliance on directors’ loans, either by converting loans to equity or repaying from operational cash flow to strengthen the balance sheet.

3. Cost Control and Profitability Improvement:

   • Conduct a detailed review of operating costs to identify and eliminate inefficiencies.
   • Explore new revenue streams or increase marketing efforts to boost turnover given reduced debtor balances.

4. Asset Utilisation and Investment:

   • Assess the impact of asset disposals on operational capacity and consider reinvestment in essential equipment if cash flow permits.

5. Tax Planning:

   • Engage with a tax advisor to manage corporation tax liabilities and explore potential reliefs or deferrals to ease cash flow burdens.

6. Regular Financial Monitoring:

   • Implement monthly financial health checks focusing on cash flow forecasts, liquidity ratios, and debt levels to detect early signs of distress.

7. Stakeholder Communication:

   • Maintain transparent communication with shareholders, directors, and key creditors about the company’s financial position and recovery plans to build confidence.

---

Medical Analogy Summary:

Butler Tree Services Limited currently exhibits symptoms akin to a patient with high blood pressure and low reserves—there is enough liquidity for now, but the high debt load and eroded equity signal vulnerability. Without intervention to improve working capital and reduce reliance on directors’ loans, the company risks moving from a fragile state toward financial failure.

---